PRICE STICKINESS AND CUSTOMER ANTAGONISM

By Eric T. Anderson, Duncan Simester. 2010

172 citations recorded by the source corpus.

Managers often state that they are reluctant to vary prices for fear of "antagonizing customers." However, there is no empirical evidence that antagonizing customers through price adjustments reduces demand or profits. We use a 28-month randomized field experiment involving over 50,000 customers to investigate how customers react if they buy a product and later observe the same retailer selling it for less. We find that customers react by making fewer subsequent purchases from the firm. The effect is largest among the firm's most valuable customers: those whose prior purchases were most recent and at the highest prices.

Subfields: Economics and Econometrics, Marketing, Safety Research

View Paper: https://www.semanticscholar.org/paper/af84159b4b59e91e27f6b3aae71978eca00cd89e

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Yu Jeffrey Hu
2. Curtis R. Taylor
3. Alessandro Acquisti
4. Duncan Simester
5. Erik Brynjolfsson
6. John Van Reenen
7. Daniel Rock
8. Nicholas Bloom

In Marketing

1. Alessandro Acquisti
2. Yu Jeffrey Hu
3. Erik Brynjolfsson
4. Curtis R. Taylor
5. Liad Wagman
6. Duncan Simester
7. Avi Goldfarb
8. Drew Fudenberg

In Safety Research

1. Alessandro Acquisti
2. Duncan Simester
3. Olivier Toubia

Citations in the corpus

• The Economics of Privacy (2016, background): “In other instances, firms may be reluctant to use first- or third-degree price discrimination, for fear of a public backlash (Anderson and Simester, 2010).”
• Online advertising and privacy (2014, unknown): “Anderson and Simester (2010) also provide empirical evidence on why firms should be cautious in engaging in price discrimination that may antagonize consumers who then react by making fewer purchases. In our model, we rule out price-discrimination by assuming that firms choose their prices before le”
• Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on the Concentration of Product Sales (2011, result): “5 Our results are robust to including or excluding consumers who live near the physical store. item than other consumers (see for example Anderson and Simester 2010).”